How Sustainability Know-how and Expertise Has Become an Integral Part of the Skill Set in Top Management

Sustainability is the new digital

Loud protests or colorful advertising posters with green-washing promises: When I think of sustainability, powerful but heavily contrasting images come to mind. And that goes far beyond current events like the World Climate Summit in Glasgow.

The term "sustainability" has trended for quite some time now. When it comes to filling management positions in the retail sector, I also observe that know-how and experience in sustainability are among the most frequently demanded qualifications for top management positions. Sustainability is often mentioned alongside buzzwords such as strategic realignment, change management, or transformation. It is no coincidence that the aphorism "sustainability is the new digital" has been around for some time. After all, sustainability has become a key factor for innovative strength, growth and securing the future.

Influence of sustainability issues on purchase decisions is growing

If your strategic business development loses sight of consumer interests and investors, sooner or later the entire business model will be at stake. With a view to consumer interests, it is becoming apparent that more and more consumers are spending their money specifically on sustainable products. A recent study by OC&C Strategy Consultants revealed that sustainability is not only becoming increasingly important to German consumers, but also increasingly influences their purchase decisions. German consumers who buy from brands that organize their processes sustainably and develop an according product portfolio, account for retail spending of 240 billion euros. That is around 40 percent of the total retail spend in this country.

Sustainability as a strategic element for the entire organization

No wonder many companies are working diligently on sustainability strategies. The motives are diverse and range from self-initiated to regulatory constraints and the consumer pressure described above. This development has given rise to new job profiles and changed the qualification profile of managers.

Like digitization, sustainability has gradually developed into a business strategy aspect that will permeate and influence all business areas in the long term. Certain industries and companies are at different stages in this journey. Where on the one hand sustainability managers operate as lone wolves or with small units, other companies are already ensuring that corresponding strategies are applied throughout the entire organization – from production and logistics to marketing and accounting.

At Ikea sustainability is a C-level matter

For some sustainability is so important that it is made a top priority. At Ikea, for example, Dennis Balslev, CEO for the important German market, has also taken on the role of Chief Sustainability Officer. At the time of this move in 2019 it sent a strong signal to the industry by showcasing the rapidly increasing importance attached to the topic in the retail sector as well as the management level at which the sustainability agenda is now ideally located in the corporate hierarchy. The furniture giant has thus made the ambitious goal of operating in a climate-positive manner by 2030 a top management task.

A necessary change can also be observed at traditional companies in other sectors. One example is in the construction industry -  responsible for 38 percent of CO2 emissions in Germany. One big player that has already recognized its responsibility is the Dax company Heidelberg Cement. Group CEO Dominik von Achten recently explained in an interview with Süddeutsche Zeitung that his company could significantly contribute to the decarbonization of the sector. That's why he wants to make the 150-year-old company greener from the ground up. In addition to von Achten, CSO Nicola Kimm, who previously held similar positions in various companies in Europe, Asia, and the USA, has also been responsible for Heidelberg Cement's sustainability agenda since September. Kimm not only took over operational responsibility for a production network in Asia for BASF but was also able to successfully implement various decarbonization initiatives during her time at Signify (formerly known as Philips Lighting). These two examples show one thing: A new generation has arrived in the executive suites of large companies that considers sustainability to be critical for the success of their business.

Sustainability as a transformation and leadership issue 

Both our experience as consultants and our global study Leadership Actions for a Sustainable Future show that targeted sustainability measures are in the interest of share- and stakeholders. Integrating sustainability into the business model as a strategic issue requires scouting networks, establishing contacts, and shaping change from the top of the organization - because change is always a question of leadership.